General Motors Reports 2011 Net Income Of $7.6 Billion

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As expected, General Motors posted 2011 calendar-year net income of $7.6 billion, or $4.58 per fully diluted share — an increase of $2.9 billion from 2010 levels, when the company posted net income of $4.7 billion, or $2.89 per diluted share.

Calendar-year revenue was up 11 percent to $150.3 billion, up from $135 billion i 2010. Adjusted EBIT (Earnings Before Interest and Taxes) was $8.3 billion, compared to $7.0 billion in 2010. The increased income and revenue levels reflect The General’s first full year as an independent company.

“In our first full year as a public company, we grew the top and bottom lines, advanced our global market share and made strategic investments in our brands around the world,” said Dan Akerson, chairman and CEO. “We will build on these results as we bring more new cars, crossovers and trucks to market, and make GM a far more efficient global team. This includes reducing our break-even level in Europe and South America and driving higher revenues around the world.”

All of GM’s regional business units were profitable except for GM Europe and GM South America, which posted full-year (EBIT) losses of $0.7 billion and $0.1 billion, respectively. Conversely, GM International Operations posted full-year EBIT of $1.9 billion while GM North America posted full-year $7.2 billion. The high earnings for North America will result in employee profit sharing of up to $7,000 to approximately 47,500 eligible hourly employees.

Additionally, General Motors has $37.5 billion in total liquidity — compared to $33.5 billion in 2010.

For 2012, GM is looking to increase top-line revenue in the expanding global auto industry and is looking to continually improve its cost structure. The company will aggressively invest in new technology and products and expects to spend $8 billion during the year.

For more details — including an update about GM’s pension plan — open the presser below.

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— Alex Luft

GM Authority Founder with a passion for global automotive business strategy.

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6 Comments

Quick question: I guess I don’t understand the meaning of profit correctly; My understanding is that GM has made a profit in the billions for the last couple (or few) quarters. Yet the prevailing wisdom is that the US will never recover the total value of its bailout, which was estimated at around $18 billion. Why won’t these profits go to paying back the bailout, which should be doable by the end of the year at this rate?

You’re correct — GM has been profitable for the last 8 quarters. But since “the bailout” was not a debt/loan, but rather an equity, GM itself doesn’t legally have to pay anything back (although it sure could if it decided it wanted to… although then you get in trouble with shareholders since GM is also now a public company).

Here’s the breakdown: the Treasury owns shares of General Motors… as such, it’s GM’s biggest shareholder and owner. The Treasury doesn’t have to sell its shares; it can sit on its stake for as long as it wants to… heck, it can even wait until 2020 — when GM’s shares will have hopefully significantly appreciated — and then dump its stake and recoup on its investment (and profit).

But to answer your original question: legally, GM doesn’t have to pay it back.

But if the Treasury has a majority stake in the shares of GM, wouldn’t it be able to funnel the profits to pay itself back? I understand that it acquired the stock through the bailout process, but it seems like the solution would be as simple as announcing a dividend…

Good question… I guess the Treasure could institute a dividend and pay themselves back… although I don’t think that would be wise given GM’s current product position and the necessity to heavily invest in new product development; the GM Europe restructuring doesn’t help, either.

If it were me, I’d just wait until the stock reaches $60 a share or so and then sell it. Heck, it went up by 2.24 today on the positive earnings news. How many more of these announcements will it take to build investor confidence and hike the stock up to $50-60 per?